A State on the move

1. Reality is this:

   CAG pulls up HP Govt
   Failure to achieve target set by 11th Finance Commission
   Rakesh Lohumi
   Tribune News Service

   Shimla, April 7
   The Comptroller and Auditor-General of India (CAG) has pulled up the
   Himachal Pradesh Government for its failure to achieve the targets set
   by the 11th Finance Commission (EFC) under the fiscal reform programme
   for the 2000-01 to 2004-05 period, which further worsened the financial
   position of the debt-stressed state. It has warned that the
   ever-increasing ratio of fiscal liabilities to the GSDP (gross state
   domestic product) together with a large revenue deficit could lead the
   state into a debt trap.

   The latest report of the CAG presented in the House today revealed that
   the fiscal liabilities almost doubled from Rs 8,621 crore in 2000-01 to
   Rs 16,533 in 2004-05 and the annual interest liability shot up from Rs
   597 crore to Rs 1,641 crore over the period.

   The average growth rate of interest payment came to 21.08 per cent. In
   addition, the state had given guarantees, which stood at Rs 4,751
   crore. The government could not maintain the minimum cash balance with
   the Reserve Bank of India and obtained ways and means advances of Rs
   1,579 crore on 93 days and overdraft of Rs 320 crore on 27 days.

   The government failed to meet the milestones set by the EFC for
   bringing about financial discipline as a result of which it could not
   avail revenue deficit grant to the tune of Rs 414.23 crore. The revenue
   receipts increased from Rs 4,634 crore from Rs 3,175 crore and the
   percentage of interest payments to revenue receipts worked out to 35.40
   per cent as against the target of 18 to 20 per cent. The increase in
   interest payment was 175 per cent over the period as compared to the
   overall recommended limit of 50 per cent for the five-year period
   ending on March, 2005.

   The state government had entered an MoU with the Union Government for
   compression of revenue expenditure, enhancement of revenue receipts and
   generation of non-debt capital receipts which it failed to achieve.

   Only eight vacant posts were abolished against a target of 2,000 posts,
   a comprehensive review of existing allowances had not been carried out
   and regulatory authority to revise passenger tariff and policy to
   enhance user charges in proportions to annual price level had not been
   framed. The report also brought out several cases of indifferent
   implementation of development projects. As many as 114 roads sanctioned
   between March, 1977, and December, 2003, remained incomplete even after
   incurring an expenditure of Rs 38.25 crore.

   Similarly, 84 rural water supply schemes and 11 irrigation schemes
   remained incomplete. Only 12,000 hectare of flood-prone area was
   protected as against the target of 2.31 lakh hectare because of
   inadequate provision of funds. Use of material other than that approved
   at Indora, Rohru and Gagret flood-protection divisions led to
   below-specification work costing Rs 65 lakh.

   The state cooperative milk producers federation accumulated losses to
   the tune of Rs 13.46 crore because of gross under-utilisation of
   capacity of chilling plants, which ranged from zero to 18 per cent in
   case of seven plants.

   An amount of Rs 279 crore was incurred without planning because of the
   failure of the Deputy Commissioner to prepare annual action plans under
   the backward areas sub-plan.

   An amount of Rs 30 lakh was paid to the St Bede’s College, Shimla,
   for addition and alterations though there was no provision for it in
   the grant-in-aid rules. A grant of Rs 1.53 crore was released to the
   GGDSD College, Baijnath, for 22 surplus posts of teaching and
   non-teaching staff.

   The arrears of revenue as on March 31, 2005 amounted to Rs 364.89
   crore. Test checks revealed under-assessment and short levy in 852
   cases resulting in loss of revenue amounting to Rs 154 crore for the
   year 2004-05. Incorrect grant of claims in respect of 18 dealers led to
   the non-realisation of sales tax amounting to Rs 23.57 crore. Wrong
   classification of 16 industrial units resulted in short levy of sales
   tax of Rs 1.22 crore.

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